Keyword: Schedule D

This is archived information that pertains only to the 2005 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

How do I report this 1099-DIV from my mutual fund?

Enter the ordinary dividends from Form 1099-DIV (PDF), box 1a, on line 9a of Form 1040 (PDF), U.S. Individual Income Tax Return. Enter any qualified dividends from Form 1099-DIV, box 1b, on line 9b of Form 1040. If you have an amount entered in other boxes of your 1099-DIV refer to Form 1040, Schedule D Instructions to see where to report them. If your only capital gains and losses are from capital gain distributions, refer to Form 1040 Instructions .

How do I figure the cost basis when the stocks I'm selling were purchased at various times and at different prices?

If you can identify which shares of stock you sold, your basis is what you paid for the shares sold (plus sales commissions). If you sell a block of the same kind of stock, you can report all the shares sold at the same time as one sale, writing VARIOUS in the "date acquired" column of Form 1040, Schedule D (PDF). However, what you enter into the "cost or other basis" column is the total of all the acquisition costs of the shares sold.

If you cannot adequately identify the shares you sold and you bought the shares at various times for different prices, the basis of the stock sold is the basis of the shares you acquired first (first-in first-out). Except for certain mutual fund shares, you cannot use the average price per share to figure gain or loss on the sale of stock.

For more information, refer to Publication 550, Investment Income and Expenses.

Should I advise the IRS why amounts reported on Form 1099-B do not agree with my Schedule D for proceeds from short sales of stock not closed by the end of year?

If you are able to defer the reporting of gain or loss until the year the short sale closes, there are certain notations you can make on your Form 1040, Schedule D (PDF) that will allow you to reconcile your Forms 1099-B to your Schedule D and still not recognize the gain or loss from the short sale. You will also need to attach a statement explaining the details of your short sale and that it has not closed as of the end of the year. Include your name as it appears on the return and your social security number.

For more on these rules and exceptions that may apply, refer to Chapter 4 of Publication 550, Investment Income and Expenses.

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